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If total liabilities increased by $45,000 and equity increased by $15,000 during a period of time, then total assets: A. decrease by $30,000. B. increase by $30,000. C. decrease by $60,000. D. increase by $60,000.

Question

If total liabilities increased by 45,000andequityincreasedby45,000 and equity increased by 15,000 during a period of time, then total assets:

A. decrease by $30,000.

B. increase by $30,000.

C. decrease by $60,000.

D. increase by $60,000.

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Solution

The answer is D. increase by $60,000.

Here's the step-by-step explanation:

The fundamental accounting equation is Assets = Liabilities + Equity.

If liabilities increase by 45,000,andequityincreasesby45,000, and equity increases by 15,000, then the right side of the equation (Liabilities + Equity) increases by 60,000(60,000 (45,000 + $15,000).

In order for the equation to remain balanced, the left side of the equation (Assets) must also increase by $60,000.

Therefore, total assets increase by $60,000.

This problem has been solved

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